Bidness Etc - Bank of America Slashes PT of Tesla Motors

After slashing off Tesla Motors’ price target, Bank of America has initiated many doubts and queries regarding the stocks of the electric car manufacturer. BofA adjusted the price target this week for the company to $65 at a discount of 68% upon its current trading stock price.
This raised several question on the future prospects of Tesla Motors Inc's (NASDAQ: TSLA). The report comes as a surprise to investors of Tesla Motors. It shocked many shareholders of the carmaker. The Wall Street, however, is mostly bullish on the company’s stock.
BoA’s analyst, John Lovallo, announced: “We believe Tesla has seemingly managed to offset a steady stream of negative news and weak financial results by issuing long-term targets that, in our view, are often quite difficult to fathom. We believe that barring a significant reset in investor expectations, this strategy is certain to lose its luster, particularly considering what we see as the long road of challenging financial results and cash burn that lie ahead.”
Mr. Lovallo has based his opinions on the financial metrics of the automobile company. He contends that Tesla’s stock is fairly priced as per its valuation, before the company launched its celebrated Model S in fiscal year 2013.
Tesla stock price increased exponentially however as the giant company’s CEO Elon Musk has promised over the years regarding its progress and innovation. Mr. Lovallo, however, who is also known as “the biggest Tesla bear on the Street,” claimed that the expectations are unreal, and suggests to discount these assurances from the valuation in order to get a clearer picture.
Tesla Motors’ progress however did reduce from a once being a thriving stock to just an automobile manufacturing company over the last year. The company’s earnings also fell short as of market expectations in the fourth quarter of fiscal 2014. The company also delivered 4% fewer cars in 4Q than FY14 guidance.
Further criticizing the company, BoA analyst claimed that Mr. Musk’s company has always been successful in “crafting and re-crafting” its story. While adding further, he stated: “Lovallo calls out Tesla for its 'latest effort to shift investor focus away from disappointing financial results' — stationary storage, using the company's battery technology. But I don't think Tesla is talking up stationary storage because it wants to tell investors to zig when they should be zagging.”
Despite the Street being fairly bullish on the Tesla’s stock, 13 analysts out of the 22 who cover Tesla suggested a Buy, whereas six recommended a Hold. The stock is currently being traded at a share price of $203.76, down by 0.17% as of 7:42 PM on Thursday. The average target price or 12-month assigned to the stock of the electric car company by the analysts is $261.68.